KUALA LUMPUR (Aug 10): Even as it endeavours to maintain a 100% payout of its distributable net income in the next fiscal year, Sunway Real Estate Investment Trust has cautioned of the “fundamentally challenging oversupply situation” brought about by tremendous new supply of retail, hotel, and commercial space in the market, exacerbated by lacklustre foreign direct investments and tourism activities.

The caution comes amid a 5.36% fall in the REIT’s net profit to RM207.11 million in the fourth quarter ended June, against RM218.84 million a year ago.

An improved performance in the office segment however nudged its net property income (NPI) 1.8% higher to RM100.27 million from RM98.52 million before, according to an exchange filing.

The REIT’s office segment NPI gained 27.55% to RM5.41 million from RM4.24 million a year ago, contributed mainly by Sunway Putra Tower. Its 'others' segment improved 28.66% to RM7.16 million from RM5.57 million on the back of the new contribution from Sunway REIT Industrial — Shah Alam 1 of RM1.4 million.

“Our acquisition growth strategy has yielded the desired results. The two newly completed properties, (namely Sunway REIT Industrial — Shah Alam 1 and Sunway Clio Property) have contributed positively to the income stream and cushioned the softer performance in some existing properties,” said Sunway REIT Management Sdn Bhd chief executive officer Datuk Jeffrey Ng, in a separate statement yesterday.

The REIT has declared a distribution per unit (DPU) of 2.15 sen in 4QFY18 totalling RM63.32 million, payable on Sept 12, compared with 2.27 sen in the same period last year.

Ng said while the retail and hotels segments are expected to grow moderately, growth will be partially offset by income disruption from the ongoing refurbishment activities at Sunway Resort Hotel & Spa.

Revenue in the fourth quarter rose 2.8% to RM136.25 million from RM132.54 million before, supported by higher average gross rent in Sunway Pyramid Shopping Mall, but partially offset by a softer financial performance in the other retail malls in the asset portfolio.

“In view of a global interest rate normalisation cycle, the Manager is cautious of the prospects and endeavours to maintain the DPU in FY19,” he said. The manager is committed to a full payout of its distributable net income for FY19.

For the full year, the REIT’s NPI was 8% higher at RM419.93 million, from RM388.82 million in the previous year. Its net profit rose marginally to RM427.69 million from RM424.48 million, while revenue was 7.18% higher at RM560.41 million from RM522.87 million.

Sunway REIT closed two sen or 1.16% up to RM1.74 yesterday, valuing it at RM5.12 billion. — theedgemarkets.com

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